Pinpointing the problem

Pinpointing the problem

Business leaders describe in a not-so-gentle manner what the government must do to initiate a recovery

The fresh Covid-19 restrictions that started a week ago dealt another blow to businesses already reeling from tepid demand and economic woes.


The government’s responsibility is to accelerate finding and procuring vaccines for Thais as quickly as possible.

Sanan Angubolkul, chairman of Thai Chamber of Commerce.

The curbs followed a sharp rise in new infections in the country the past month, with the daily infection tally just surpassing 10,000 on Saturday.

This prolonged crisis has forced many firms to adjust business plans as they try to gauge how long it will take for the country to recover.

Many of them are cautious about their liquidity, aiming to keep their business running while hoping the government can manage a solution.

Several business leaders share a common view that more could be done to address the sluggish vaccination rate to save lives and steer the country towards a recovery.

The Thailand Development Research Institute (TDRI) stated the government mismanaged the disease control and vaccination programme, plunging the country into "health and economic crisis".

The mishandling led to opportunity loss as other countries see their economies restart, in addition to diminishing the country's competitive advantage on the global stage, said TDRI in a recent analysis.

The think tank pointed out the government was overconfident, believing it could keep the infection rate low, which led it to be cautious in seeking vaccines.

Another error for the administration was too much reliance on AstraZeneca vaccines, with Sinovac jabs as a back-up, said TDRI. This resulted in a lack of vaccine diversification.

As the country stumbles along amid the pandemic, the Bank of Thailand last month revised the country's 2021 economic outlook from growth of 3% to 1.8%, weighed down by weak consumption and fewer foreign visitor arrivals than expected.

The government needs to take infected people away from their families as fast as possible during the lockdown period.

Supant Mongkolsuthree, Federation of Thai Industries chairman.

VACCINE VACUUM

Sanan Angubolkul, chairman and president of SET-listed Srithai Superware, the world's largest melamine manufacturer, said vaccines are only the country's solution.

"If the government fails to supply enough vaccines to cover the majority of the population by the end of this year as planned, the country's public healthcare system and economy could fail, leading to social problems," said Mr Sanan, also the chairman of the Thai Chamber of Commerce.

The private sector has offered to help procure alternative vaccines to curb the spread of the Covid-19 infections, and he said the government should support this move, facilitating diplomatic and international relationships to speed up the purchase of as many vaccines as possible.

"The government's responsibility is to accelerate finding and procuring vaccines for Thais as quickly as possible in a transparent and earnest manner," said Mr Sanan.

He said there is no longer time to blame one another and urged a sincere government effort to secure vaccine supply, leading to a cooperative attempt by the public and private sector to curb the pandemic spread.

Mr Sanan brushed aside growing calls for the prime minister to resign or to dissolve the House, saying there is no easy solution to the virus crisis.

He advised every business owner to look after his or her own liquidity, while more borrowing is needed to support firms.

Boonkiet Chokwatana, chairman of I.C.C. International Plc, the fashion and beauty marketing arm of Saha Group, Thailand's leading consumer product manufacturer, agreed with Mr Sanan, saying the premier stepping down does not change the situation.

"Warriors do not change horses during the battle because there is a higher likelihood of losing. Every task has its own complexity," he said.

"Newcomers cannot always realise what has been done before. Continuity is very important during a crisis."

According to Mr Boonkiet, the country will survive if everybody keeps social distancing, wearing masks and washing hands to help safeguard against Covid-19.

"I.C.C. will survive because of our strong financial background," he said.

"We have had good monetary discipline for many decades and continue to beef up our businesses that are not affected by Covid-19."

LAST-DITCH EFFORT

The three waves of outbreaks have led many businesses to become entangled in a web of debt and these entrepreneurs are disappointed in the state management of the mass vaccination scheme, according to the Federation of Thai Industries (FTI).

"Businesses of all sizes have had to adjust their strategies so many times, they no longer know what to adjust to," said Supant Mongkolsuthree, chairman of FTI.

"Some are simply waiting for a turn of events as new daily infections creep over 10,000."

He said the last-ditch effort for such entrepreneurs is to keep negotiating with creditors to reduce their debts, both principal and interest, or be granted a moratorium on principal payment.

It is "very difficult" for most of them to get a satisfactory outcome, said Mr Supant.

The continued government failure to curb high infection rates makes it more likely businesses will shut down, he said.

"The government needs to take infected people away from their families as fast as possible during the lockdown period, when people are advised to stay home," said Mr Supant.

Authorities must also keep their pledge to vaccinate 70% of the population to build herd immunity, he said.

Responding to the TDRI's criticism of the government's handling of the pandemic and vaccine supply, Mr Supant said the FTI's comment is similar to that of other organisations, adding that people are aware of what is happening.

The severe impact of the third wave is partially the result of slow vaccination and ineffective communication with the public, he said.

If airlines in Thailand have to endure another year of economic turbulence, none will survive.

Tassapon Bijleveld, executive chairman of AAV.

LIVING WITHOUT FEAR

Tassapon Bijleveld, executive chairman of Asia Aviation (AAV), the largest shareholder of Thai AirAsia (TAA), said airlines in Thailand have gone through economic turbulence for over a year. If they have to endure another full year of the same, none will survive.

TAA implemented every possible cost reduction in the past year, such as suspending 75% of the workforce in response to soft travel demand, yet the bottom line still fell far short of its performance in 2019.

"We have maintained cost reduction to offset monthly cash burn in order to sustain the business under unusual circumstances," said Mr Tassapon.

Pilots who continued to fly received only 50% of their regular income, while the airline sold some jets to offload the financial burden.

Another tactic was to negotiate with aircraft leasing companies to delay repayment terms, he said.

"Effective vaccines remain the country's greatest need," said Mr Tassapon.

"Herd immunity will enable people to live without worrying about a life-threatening virus."

He said when people are free from fear, most businesses will run as usual without heavy dependence on state support.

"Covid-19 will eventually become endemic -- we cannot escape it. This country should not be hurt by repetitive lockdowns anymore. We should learn to live with it, not control it," said Mr Tassapon.

"Look at restaurants and hotels -- they have closed and reopened repeatedly. Every reopening requires a maintenance budget, which they couldn't see a return on before being forced to close again."

He said the government spent a fortune on stimulus packages under the 3.3-trillion-baht budget bill, but those measures had a minimal economic impact.

The majority of financial aid measures were earmarked for grassroots areas, which was insufficient to stimulate the whole economic system, said Mr Tassapon.

Several businesses feel they were left behind in the stimulus scheme, he said.

Mr Tassapon suggested regulators adopt a new mindset, refraining from rules issued before the pandemic that hinder most businesses from receiving necessary support.

The government must work to procure more effective vaccines to cope with the worsening Covid situation, he said.

Mr Tassapon said reopening the whole country by mid-October is impossible if the vaccination rate falls short of 70%.

"We reached the point where keeping closed down is not an option anymore. Reopening is our last gasp of breath," he said.

I am speaking up against the excessive power of the 250 senators. This is a flaw in our democratic system that destroys the trust of the people.

Srettha Thavisin, president and chief executive of Sansiri.

LISTEN TO THE PEOPLE

Srettha Thavisin, chief executive and president at SET-listed developer Sansiri, said the goal to reopen the country in mid-October will not happen at the current vaccination pace of 300,000 doses per day.

The pace should be 500,000-700,000 doses a day if the administration wants to meet its timeline, said Mr Srettha.

"There is a shortage of vaccines and limited types preventing broad administration to those in need," he said.

Mr Srettha said Sansiri remains committed to its plan to launch 20 projects this year worth a combined 20 billion baht, but it will monitor the Covid situation the next 45 days as the closure of Bangkok construction camps may cause a delay.

The sentiment of homebuyers and lower purchasing power could also affect the company's outlook.

Sansiri has cash on hand of 17 billion baht as a result of a swift response to the pandemic 18 months ago, he said.

Aggressive promotions throughout last year helped the firm preserve consistent cash flow and keep employment levels stable.

Even though the government failed to control widespread Covid-19 transmission, now is not the time to start a blame game, said Mr Srettha.

He believes the government realised its mistakes given the flood of public criticism.

"The priority for businesses should be to help those that are weaker," Mr Srettha said.

"We should focus on supporting each other as much as we can."

Procuring enough vaccines for the entire population of 70 million is more important than any spending stimulus measures, he said.

"Of the 3.3-trillion-baht rehabilitation budget, 200 million doses of vaccines will cost around 6.7% of the budget, or a mere 200 billion baht," said Mr Srettha.

"This is the cheapest and most effective method to heal our battered economy."

He believes the people want a government that listens to and cares for them, but this will not happen without a constitutional amendment.

"I am speaking up against the excessive power of the 250 senators. This is a flaw in our democratic system that destroys the trust of the people, as they feel they are being exploited and are unequal," said Mr Srettha.

"Even if we have a new general election, the result won't change if this rule remains the same."

By blocking the authority of senators to vote for the prime minister, this will bring a graceful constitutional monarchy back to the country because people could be assured they would get a leader they want with the ability to steer the country past the crisis, he said.

The government must implement remedy measures for all people.

Somchai Lertsutiwong, chief executive of Advanced Info Service (AIS).

COLLECTIVE ACTION NEEDED

Kasikornbank (KBank) chief executive Kattiya Indaravijaya said during the outbreaks, the bank's priority was its employees' wellness and safety.

"We target vaccinations for all employees at KBank and our subsidiaries. KBank collaborated with the Social Security Office to establish a vaccination centre for our employees and people living in the community who could not easily reach a hospital," said Ms Kattiya.

In addition to relief measures proposed by the Bank of Thailand, KBank offers additional assistance to both retail and business clients in various forms.

"Recently we launched a lending scheme aimed at shoring up liquidity for small restaurants and retail stores hurt during the pandemic," she said.

This loan programme is for customers who have an account with KBank.

Borrowers are granted a loan of up to 300,000 baht with an interest rate of 3% and a three-month grace period for principal payments.

KBank set aside 3.5 billion baht under this special lending facility, which is expected to help 35,000 small restaurants and retail stores maintain their liquidity and stay afloat, said Ms Kattiya.

Kasikorn Research Center downgraded its GDP growth projection for 2021 from 1.8% to 1% amid a higher degree of uncertainty.

"The latest wave of Covid-19 has yet to affect the overall operation strategies or financial targets of KBank. We will monitor the situation and more prudent measures may be applied if necessary," she said.

Ms Kattiya said resources in both the public and private sectors, as well as for households, have been depleted following multiple waves of outbreaks.

"Everyone has a role to play and the responsibility to take care of themselves and their business," she said.

"For those with ample resources, consider extending help to others in the community."

In the private sector, large companies could collaborate with smaller operators in the supply chain to generate income and boost employment, said Ms Kattiya.

Government could expedite budget disbursement and investment to inject more cash into local communities, and thus increase employment, she said.

Collective action from all parties is needed to help both businesses and individuals facing financial hardship, said Ms Kattiya.

Warriors do not change horses during the battle because there is a higher likelihood of losing. Continuity is very important during a crisis.

Boonkiet Chokwatana, chairman of I.C.C International Plc.

PLUNGING PURCHASING POWER

Somchai Lertsutiwong, chief executive of Advanced Info Service (AIS), the country's largest mobile operator by subscribers, said the government must take three actions to weather this crisis.

First, the government must effectively diagnose Covid-19 patients and classify them according to the severity of their health conditions so each patient tier will receive proper care, he said.

Second, the government and related agencies must end confusion about its vaccination plan, which would enhance public confidence in the scheme, said Mr Somchai.

Finally, the state must implement remedy measures for all people. The government may have to reallocate budgets from projects deemed unnecessary to tasks meant to fight against the pandemic, he said.

Mr Somchai said every business sector is affected by declining purchasing power because of the pandemic.

Telecom operators need to ramp up investment because of rising demand for internet during the pandemic, even as profit margins dwindle, he said.

Since April, 90% of AIS staff, excluding call centres and some divisions, have been divided into two teams -- A and B -- with one group working from home and the other at the office.

The company is trying to reach customers via online apps as service shops are closed.

If restrictions are eased, unit heads can decide whether they need their staff back at the office or they can continue at home, said Mr Somchai.

In the long run, enterprises should find a balance for operations that mixes online and offline, he said.

"Online only is not the best solution as these services cannot guarantee the best output all the time," Mr Somchai said.

He said 2021 and 2022 are a key period for the country's economic recovery, with 5G a core infrastructure asset for the industrial sector to thrive in the new economy.

For those with ample resources, consider extending help to others in the community.

Kattiya Indaravijaya Chief executive, KBank

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